Five Standards to Guide Ukraine’s International Recovery and Reconstruction Partners

Mercy Corps welcomes the unwavering support extended by the international community towards the recovery and reconstruction efforts in Ukraine. This support is instrumental in addressing the challenges faced by the country and its people and in facilitating the path towards a better and sustainable future. Reconstruction and recovery needs, as of February 24, 2023, based on the second Rapid Damage and Needs Assessment, are estimated at about $411 billion. The most affected sectors are housing, transport, energy, commerce and industry. Damage is concentrated in the frontline regions (oblasts), particularly Donetsk, Kharkiv, Luhansk, Zaporizhzhia, Kherson, Mykolaiv, and Chernihiv. Kherson and surrounding regions have been particularly affected by the recent Nova Kakhovka dam destruction, adding an additional layer of damage to residential areas and urban centres as well as agricultural land and a new wave of forced displacement amounting to thousands of evacuees.

The government of Ukraine (GoU) has taken initial steps to meet some of the urgent needs via state budget and partner support, most notably supporting internally displaced persons, the social protection system and ongoing repairs in the energy and transport sectors. The National Recovery Plan presented by Ukraine in Lugano in 2022 and prepared by the National Recovery Council, a presidential initiative, outlined Ukraine’s vision for recovery in the short and long term (2032) and identified 15 national programmes to boost Ukraine’s Recovery and achieve growth targets. These priority programmes cover a range of policy areas varying from national security (priority 1) to a targeted and effective social policy (priority 15). More recently, at the 2023 Ukraine Recovery Conference hosted by London, Ukraine’s international partners have also explored the role the private sector can play in Ukraine’s recovery and reconstruction. It is essential to acknowledge that the private sector is an important contributor to this process, particularly in creating livelihood opportunities for war-affected people, internally displaced persons (IDPs) and host communities, as well as stimulating the local economy. Moreover, private companies bring specialised knowledge, skills, and advanced technologies that can accelerate reconstruction efforts. It is worth noting that Ukrainian manufacturers could provide 90% of the construction materials needed for reconstruction as of November 2022, which the government has estimated at $62.8 billion. Using Ukrainian-made construction materials could help preserve 100,000 jobs and facilitate $5.6 billion in wages and $4.4 billion in tax revenue.

Ukraine will require less external macroeconomic aid from donors, and the total cost of reconstruction will be less due to lower prices for Ukrainian-made building materials. At the same time, it remains important to consider that a robust recovery and reconstruction effort, that supports a full social as well as physical and economic recovery, should recognise and involve all segments of Ukrainian society in different layers of decision-making.

Key considerations:

• Unsustainability: While international aid and assistance are crucial for jumpstarting the recovery process, heavy reliance on external aid without a comprehensive plan for long-term sustainable development can create a cycle of dependency, which will ultimately be unsustainable. Aid dependency can undermine Ukraine’s ability to mobilise its own resources, develop domestic industries, and promote self-sufficiency.

• Lack of local ownership: The already significant involvement of international actors may overshadow local ownership and decision-making. In some cases, the priorities and needs of local communities might not have been adequately considered, leading to a potential disconnect between the reconstruction efforts and the actual needs on the ground, specific to each region and community across Ukraine.

• Limited transfer of knowledge and skills: While international assistance brings technical expertise, there needs to be an increased focus on transferring knowledge and promoting local skills. Insufficient emphasis on training and empowering local actors to take over the management and maintenance of social infrastructure projects could hinder their sustainability.

• Accountability and transparency: International involvement can support heightened levels of transparency and accountability. Institutional donors and international financial institutions, and international organisations should support the enforcement and running of accountability mechanisms, such as monitoring and evaluation frameworks, financial reporting, and project audits. This also includes supporting civil society-led transparency initiatives.

• Severe impacts on the agricultural sector: Agriculture plays a critical role in Ukraine’s economy and society. Nearly a third of Ukrainians lived in rural areas prior to the full-scale war, which completely upended producers’ abilities to plan and respond to market opportunities. There are 30,000 small producers in Ukraine, and 70% of those interviewed by Mercy Corps indicated that they struggle to make medium and long-term plans within the current environment.

It takes all segments of society to ensure a principled and effective reconstruction effort. Informed by our Ukrainian national and local programme and policy partners, Mercy Corps calls for institutional donors and international financial institutions to adopt five standards as support is being mobilised for the recovery and reconstruction of Ukraine.